House Prices Rise In May (Ok Just By A Bit!!)

The latest Nationwide House Price Index revealed house prices rose 1.2% in May, meaning the annual rate of decline has improved to -11.3%.

The findings mean the average UK house price now stands at £154,016.

Martin Gahbauer, Nationwide’s chief economist, said: “The three-month on three-month rate of change - a smooth indicator of short-term price trends - rose from -3% in April to -0.5% in May and now stands at its highest level since January 2008.

“Although the short-term trend in house prices has clearly improved from where it was at the beginning of the year, it is still too early to say that the market is turning definitively. During the downturn of the early 1990s, there were many months during which prices rose, only to fall back down again in subsequent periods.

“In the current downturn, the combination of rapidly rising unemployment and tight access to credit implies that the last of the price declines has probably not been seen yet. Nonetheless, the improvement in house price trends is consistent with signs of stabilisation in several other economic indicators and suggests that any further price declines may occur at a less rapid pace than in 2008.

“The movement of house prices ultimately depends on the balance of demand and supply of houses on the market. One timely indicator of the supply-demand balance is the ratio of sales to unsold stock, published monthly by the Royal Institution of Chartered Surveyors. For most of 2008, this measure was on a steady declining trend, consistent with the acceleration of house price falls as the year progressed. Although it remains at a very low level by historical standards and continues to point to further house price declines, the ratio has recently stabilised somewhat and this probably explains some of the improvement in price trends over the last few months.

“For the moment, however, it is unclear how the balance between supply and demand will ultimately work through in the coming months.”

Source: YourMortgage

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